UK average diesel costs have struck a 16-month high, less than a week after war gripped the Middle East. and sent oil costs rocketing.
Global energy prices have been the main financial market focus since Tehran launched attacks against Gulf nations in retaliation for the US-Israeli strikes on its country, disrupting production and deliveries of both oil and natural gas.
The narrow Strait of Hormuz in the Persian Gulf, between Iran and the United Arab Emirates, is used to more than 80 tankers a day passing through.
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But shipping has been reduced to a trickle amid Iranian attacks and threats, with all the disruption to normal trade flows being quickly reflected in petrol and diesel prices across Europe and the US through higher wholesale prices.
Sky News was told on Tuesday how those for UK diesel had risen by 7p-per-litre and 2p for petrol in the wake of big rises to oil prices on Monday, when financial markets gave their first reaction to the US-led military strikes.
The Petrol Retailers’ Association (PRA) believed at the time that those higher wholesale costs would likely filter through to the pumps over the course of the next few weeks, but it warned that some forecourts would have to pass them on more quickly because of the nature of their fuel-buying contracts.
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RAC head of policy Simon Williams said of British fuel price averages on Thursday evening: “Petrol has now increased by 3p to 136p a litre since Saturday, while diesel is up by 5p to a 16-month high of 147p.
“While wholesale costs for any retailer buying in new stock will have gone up, it normally takes two weeks for price changes to work their way through to the forecourt”, he said.
The PRA told Sky News in response that drivers should shop around to find the lowest prices in their areas using the fuel finder app and website. It denied any suggestion that its members were profiteering.
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The body insisted it was not in the interests of fuel operators to force customers elsewhere.
The industry has long been accused of being quick to put prices up and slow to pass on lower costs.
It has also faced trial by regulator since the end of the pandemic.
The latest fuel market update by the Competition and Markets Authority at the end of last year concluded that motorists were continuing to get unfair prices, with retailers’ margins remaining “persistently high”.
It is clear that fuel price averages will rise further over the coming week at least, as hostilities in the Middle East continue apace.
The effects of the war on global oil prices saw Brent crude rise to its highest level of the crisis so far on Thursday evening.
The international benchmark was up more than 5% during the day at the $85.50 level. Oil prices rose after Iran launched a new wave of attacks against Israel, American bases and countries across the Middle East including the UAE and Qatar.
This had a ripple effect across financial markets, with shares plunging on Investors’ fears that an extended spike in energy costs would push up inflation, pushing central bank interest rates higher in the process.
In London, the FTSE 100 ended the day almost 1.5% down while its counterparts in France and Germany saw similar falls.
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AJ Bell head of financial analysis Danni Hewson said the falls in London were widespread, with some sectors suffering worse than others, such as housebuilders.
“Higher mortgage rates are thought to have deterred many would-be buyers over the past couple of years, but 2026 had promised so much.
“News that three lenders are once again reversing course and raising their mortgage rates will be a bitter pill to swallow, especially if concerns about the return of higher inflation are well founded”, she wrote.
